Injured Worker Cost per Claim Rises in Texas, Louisiana

Payments per claim for the medical care of injured workers in Texas grew nearly 8 percent in 2011, largely the effect of price increases from earlier reforms, according to a 16-state study by the Workers Compensation Research Institute (WCRI).

WCRI’s study, CompScope Medical Benchmarks for Texas 14th Edition, said the growth in medical payments per workers’ comp claim in Texas was faster than in prior years and more rapid than in most other states in the study.

WCRI also found that payments per claim for the medical care of injured workers in Louisiana were higher and growing faster than in most states. WCRI’s, CompScope Medical Benchmarks for Louisiana 14th Edition, found medical payments per claim grew more than 7 percent per year from 2006 to 2011, which was a faster growth rate than most states.

Reforms in Texas

WCRI continues to monitor the impact in Texas of the series of reforms on medical costs, particularly House Bill (HB) 7, enacted in 2005, on prices and utilization of medical care for injured workers.

“Prior to the reforms in 2001 and 2005, Texas medical payments per claim were the highest of the study states. In recent years, however, they were lower than the typical state in the study,” said Ramona Tanabe, WCRI’s deputy director and counsel.

The study found fee schedule increases in Texas following Medicare updates as required under HB 7, and the 2011 ban on informal networks drove an increase in prices for medical services, fueling the recent growth in medical payments. A decrease in utilization of nonhospital care slightly offset the increases in prices.

Medical payments per claim were lower than the typical study state following the series of reforms, according to the study. That finding resulted from lower-than-typical prices paid for some medical care and large decreases in utilization of medical care.

Litigation in Louisiana

In Louisiana, a major contributor to the higher average medical payment per claim was much higher hospital outpatient payments per claim in Louisiana; this also contributed to the rapid growth rate. According to the study, these results reflect the state’s reimbursement approach.

The fee schedule sets reimbursement for hospital outpatient services at 90 percent of billed charges. However, the workers’ compensation statute calls for reimbursement based on the mean of usual and customary charges. The result of these conflicting provisions is considerable litigation.